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NPD: Digital Music Downloads Still Rising

Port Washington, N.Y. – The market for digital music ownership continues to grow despite increased usage of streaming radio and on-demand services, The NPD Group said.

NPD defined digital music ownership as consisting only of paid, permanent downloads.

The digital music market will grow by about 10 percent on a unit basis in 2012 even though online radio and on-demand services “remain the fastest growing form of music consumption in the U.S.,” NPD said.

From its consumer surveys, NPD found Apple continuing to dominate unit sales of the paid-for digital-music download business in the U.S. as well as the overall U.S. music business, which consists of paid-for downloads and physical CDs. In the second quarter of 2012, iTunes held a 64 percent share of the digital music market and a 29 percent share overall retail music sales, NPD said. The company calculates overall retail music share based on 10 digital music tracks equaling one CD album.

In digital share, Amazon’s MP3 store was a distant second to iTunes, with a 16 percent share. Google Play, eMusic, Zune Music Pass and other sites each had a share of 5 percent or lower. Consumer awareness of Google Play, however, has grown to 20 percent of Internet users in Q2, thanks to the integration of Google Music with Google’s Android Market and eBookstore, NPD said.

 In the overall U.S. music market, Apple led all music retailers in the second quarter, with 29 percent share, followed by Amazon/AmazonMP3 at 19 percent and Walmart at 11 percent.

Online radio and on-demand services remain the fastest-growing form of music consumption in the U.S. as consumer awareness grows, NPD also said. Consumer awareness of Pandora’s free ad-supported radio service represented half of all Internet users in Q2, and one-third were also aware of the company’s paid subscription service. iHeartRadio, Clear Channel’s radio service, followed with 25 percent awareness, while Spotify’s consumer awareness hit 19 percent. Half of respondents who were aware of Pandora actually used the service during second quarter, but only a quarter of web users who recognized iHeartRadio or Spotify also used these services.

NPD noted that 64 percent of iTunes buyers listened to online radio, helping explain Apple’s rumored interest in launching music streaming services.